Australia: The importance of meaningful consultation with regard to any proposed redundancy

Last Updated: 27 October 2017
Article by Emily Dempster and Nicole Davis

All modern awards and enterprise agreements require employers to consult with employees regarding any major workplace change that may have a significant effect on their employment.

In brief: Redundancies, by their very nature, can be tricky for many employers to successfully implement. They are stressful for all involved and things can go from bad to worse very quickly, if not handled properly.

Many employers make the fatal mistake of focusing solely on the operational and financial constraints from which a redundancy is born. In doing so, they fail to give proper consideration and weight to their obligations to consult with employees.

What you need to know

Employers may be obligated to consult with employees regarding any major workplace change in accordance with the applicable modern award or enterprise agreement.
There is generally no obligation to consult with employees who are not covered by a modern award or enterprise agreement (although it may be best practice to do so in certain circumstances), subject to any workplace policy requirements.
Consultation is an opportunity for employees to express their views regarding a proposed major workplace change so that those views can be taken into account by an employer.

The obligation to consult

All modern awards and enterprise agreements require employers to consult with employees regarding any major workplace change that is likely to have a significant effect on their employment. Whilst it is best practice to do so in certain circumstances, subject to any workplace policy requirements, there is generally no obligation to consult with employees who are not covered by a modern award or enterprise agreement.

Consultation under a modern award or enterprise agreement usually requires employers to inform their employees of any decision to introduce any major workplace change as soon as practicable after the decision is made and to discuss the changes with the employees and their representatives.

The recent Fair Work Commission (Commission) decision in Mr Muhammad Buttar v PFD Food Services Pty Ltd T/A PFD Food Services [2017] FWC 4409 (24 August 2017) provides a good example of an employer's failure to consult with an employee in a "meaningful" way.

The Buttar decision

National food processing and distribution company, PFD Food Services Pty Ltd (PFD), made Mr Buttar's position redundant following a legitimate operational restructure of the business. During his employment with PFD, Mr Buttar was covered by the Seafood Processing Award 2010 (Award).

The issue before the Commission was whether Mr Buttar's dismissal was as a result of a genuine redundancy within the meaning of the Fair Work Act 2009 (Cth) (Act), and if not, whether the dismissal was "harsh, unjust or unreasonable".

In his decision, Deputy President Anderson considered whether a meeting between Mr Buttar and Mr DeCasto (PFD's General Manager for South Australia and Northern Territory) was sufficient to meet PFD's consultation obligations under the Award. This meeting occurred after Mr DeCasto had formed the view that Mr Buttar was likely to be affected by proposed redundancies. Prior to him reaching a final decision, Mr DeCasto did not call a meeting. In fact, Mr Buttar attended Mr DeCasto's office on his own volition as he had become concerned over rumours that PFD was going to commence a police investigation into missing stock and he wanted to profess his innocence.

Whilst Mr DeCasto told Mr Buttar that it was possible that his position would be made redundant during this meeting, he provided no details regarding the restructure or how it would affect Mr Buttar. Mr DeCasto became frustrated with Mr Buttar who continued to profess his innocence during the meeting despite Mr DeCasto reiterating he was under no suspicion. As a result of his frustration, Mr DeCasto resolved at the end of the meeting that Mr Buttar's position would be made redundant. As a result, Mr Buttar's employment was subsequently dismissed.

Deputy President Anderson determined that the meeting did not discharge PFD's consultation obligations as it did not constitute meaningful consultation. Ultimately, PFD was found to have unfairly dismissed Mr Buttar and was ordered to reinstate him:

  1. to his former position (which no longer existed); and
  2. i n circumstances where it was accepted that the difficulties between the individuals involved would require further management.

What is 'meaningful' consultation and how can employers remain compliant?

As PFD discovered, an employer must ensure that it meaningfully consults with employees regarding any proposed redundancies.

But what exactly constitutes consultation in a meaningful way? The PFD decision assists in identifying the level of engagement that the Commission requires from employers in order to demonstrate compliance.

When entering the consultation phase of any workplace changes, it is important for employers to ensure that employees are made aware of the types of changes that are to be implemented and how these changes are going to affect them (either directly or indirectly).

Further, employees need to be given an opportunity to respond and provide suggestions, and employers need to consider any such responses and/or suggestions and participate in discussions with employees regarding the same.

In order to assist in meaningful consultation, employers should take steps to:

  • meet with affected employees to discuss all relevant information about the change, setting out the nature of the changes proposed, the effects of the changes on the employees and any other matters of relevance (such as redeployment opportunities);
  • following this meeting provide affected employees with written correspondence (such as a memo) to provide an overview of what was discussed.
  • invite employees to raise any matters or make any suggestions regarding the proposed change either during the consultation meeting/s or subsequent to the meeting;
  • where employees raise matters in relation to the change, they should be acknowledged, considered and addressed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.

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